Fixed-rate buyers 'losing out'

HUNDREDS of thousands of homebuyers who chose fixed-rate mortgages to protect them from rising interest rates have lost out badly, according to a study. They are repaying far more than buyers who picked a discount mortgage with rates that go up and down in step with the general cost of lending, a survey by brokers London & Country Mortgages found.

The best £100,000 fixed-rate mortgage started in 1997, for example, has cost £6,772 more so far than the best discount mortgage.

While the fixed-rate buyers feared rising interest rates, these have generally fallen over the last four years, according to the study. They also paid in higher redemption fees.

It said fixed-rate schemes were best for big borrowers who needed the security of steady repayments. Discount schemes exposed borrowers to the risk that mortgage rates would soar - a particular fear if economic recession strikes.